7/4/14

A year ago we presented
a description of secular fall in the labor force
participation rate, LFPR, measured by the Bureau of Labor Statistics. The LFPR
(the portion of people in labor force) for the working age population (16 years
of age and over) has been on a long-term decline since 1995. We predicted the
fall down to 59% by 2025. Here we revisit this projection and find that our
forecast was correct – the rate has decreased by 0.6% (from 64.4% to 62.8%). This
is a dramatic drop considering the level of labor force of 155 million.

Following the Kondratiev wave approach
(the Russian economist Kondratiev introduced long-period (50 to 60 years) waves
in economic evolution – see Figure 1) we interpolated the observed LFPR curve
by a sinus function with a period of ~70 years. We added 11 LFPR readings published
since July 2013 and show the updated curve in Figure 2. New data fit the predicted
curve.The trough of the model function
is expected in 2030 and the bottom rate is 58.5%.

Figure 1. The Kondratiev wave

Figure 2. The actual LFPR curve (red) and that predicted
by sinus function with a period of ~70 years.

Definitely, the current events in Ukraine
will affect the evolution of population. The World Bank expects 79% of the 2010
level in 2050, as Figure 1 depicts. Twenty
one per cent of population will be lost.

Devastating.

Figure 1. Depopulation of Russia, Japan, and
Ukraine. All curves are normalized to their respective values in 2010. Ukraine will reach 79% by 2050

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